The business behind the show

Apple Inc. in preliminary talks to acquire Hulu

July 22, 2011 | 11:38
am

Apple Inc. has joined a handful of companies, including its chief rival Google Inc. and online portal Yahoo, in weighing a potential offer for video service Hulu, a person with knowledge of the situation confirmed.

The discussions are still in the early stages, said that individual, who requested anonymity because the negotiations are confidential.

Apple spokesman Steve Dowling said the company would not comment on rumors or speculation. A Hulu spokeswoman similarly declined to comment. The discussions were first reported by Bloomberg News.

Hulu has emerged as one of the leading sites for watching TV shows online, attracting about 28 million monthly visitors, according to measurement firm ComScore. Its media owners, News Corp., Comcast Corp.-owned NBCUniversal and the Walt Disney Co., have opted to put the service up for sale, in part because its success was creating conflicts with existing business arrangements, but also to capitalize on the hot investment climate for technology companies.

The site could fetch a price as high as $2 billion, according to banking estimates.

Hulu offers a radically different proposition to consumers than is available now through Apple's iTunes store, which sells episodes of TV shows for $2.99, and, in some cases, offers a 99-cent rental. Hulu, by contrast, allows viewers the ability to watch current TV shows online for free -- but with advertising included. A subscription service, Hulu Plus, offers a broader selection of programs that can be viewed on more devices for a monthly fee of $7.99.

"The natural model for distributing TV shows is ad-supported or subscription, not on an individual program rental basis, nor even the episodic purchase model," said Arash Amel, IHS Screen Digest's research director for digital media.

"Subscription and advertising is what the TV consumer is familiar with, and any digital platform will have to replicate that model to succeed [in the] mass market," Amel suggested. "That is as true for Apple as it is for any other technology company seeking to provide TV content."